Declining Land Values Make Budgets A Moving Target

For homeowners, lower taxes in this recession are a godsend. But for governments, declining property values are the devil.

Florida property values are 12 percent lower this year than state economists estimated last year, said State Rep. Denise Grimsley. It's a $200 billion reduction in taxable property values.

"This change in property values will make it very hard for legislators to meet the budgetary goals set just a few weeks ago by Gov. Crist, who had used the old, higher property values when setting his budget for education," Grimsley said.

The state expected a $5 billion shortfall in the 2009-10 budget. No, it will be even worse, Grimsley suggested.

On Friday, state economists would forecast expected state budget revenues for the upcoming fiscal year beginning July 1, she said.Due to lower consumer spending and a precipitous drop in real estate transactions, revenues may be $6 billion less.

Locally

In Highlands County, the picture is even bleaker.

"We're estimating at this time - and this is nothing but just a projection, based on gut feelings and experience - that taxable values will be down 15 to 20 percent," said Property Appraiser Raymond McIntyre.

In real dollars, it takes $9 million from Highlands County's $164 million budget. And that's just the beginning of the budgetary shortfall, since the recessionary economy means collections of sales tax, gasoline tax, document stamps and other revenues will also be down, said County Commissioner Guy Maxcy.

The state legislature and the county commissioners can raise the property millage rate to continue to collect a similar amount of taxes.

"That's not true for us," said Mike Averyt, assistant superintendent of business and operations. The School Board of Highlands County can collect - by state law - 1.75 mills for its capital fund. The state legislature sets property tax millage for the school's general fund.

A 15 percent decline in property tax values means instead of $11 million in the capital fund, the schools will have $10 million to pay for portable classrooms and buy new computers.

"We try to replace school buses every 10 years," said Averyt. "We have about 100 buses in our fleet, but last year, instead of replacing 10 buses, we only bought three buses. This year, we may only buy two."

Each school will receive fewer technology dollars, Averyt said, so older computers will remain longer in the classrooms.

"The continued decline in property values is affecting the amount of tax dollars available for education funding this year," Grimsley said.

New Frontier

"We've never crossed these waters before," said McIntyre, who has been a property assessor for 24 years. "We've never experienced 'negative growth.'"

Even so, he reminded, a growth spurt started in 2004, when the value of property soared almost 20 percent. In 2006, there was a 41 percent increase.

"In taxable value, we're still way ahead of where we were," McIntyre said.

Economists are projecting property values will not grow again until 2011, the assessor said.

Higher Taxes

County commissioners and city councilors have the option to increase revenue by raising taxes, an unpopular move even during good times.

"I'm not going to vote for a tax increase," said George Hall, a city councilor in Avon Park, which has already started 2010 budget hearings. "We'll cut spending before we do that. Of course, I'm only one of five sitting up there."

Guy Maxcy is one of five Highlands County commissioners. He wasn't ready to take the George Bush, "Read my lips: no new taxes" pledge, but he was firm nevertheless.

"There is absolutely no way are we going to increase taxes," Maxcy said. "I wouldn't do that to the people of Highlands County. We're going to find every way we can to cut back. I'd hate to lay folks off. Maybe there are some salaries we need to look at. Maybe folks need to consider not having a pay raise this year. If we receive help from the constitutional officers, maybe we can do it."

The county commission starts budget hearings in May.